MNRE Defines Payment Mechanism under Utility Led Aggregation Model

In a significant step toward enhancing financial transparency and accountability in India’s rooftop solar sector, the Ministry of New and Renewable Energy (MNRE) has issued a new Office Memorandum dated October 6, 2025, defining a structured payment release mechanism for projects implemented under the Utility Led Aggregation (ULA) Model of the PM Surya Ghar: Muft Bijli Yojana (PMSG: MBY).

This directive, issued in continuation of the earlier operational guidelines dated December 28, 2024, aims to streamline the disbursement of Central Financial Assistance (CFA) and ensure a transparent, verifiable flow of funds across utilities, vendors, and implementing agencies engaged in rooftop solar deployment.

The PM Surya Ghar: Muft Bijli Yojana is a flagship national program designed to promote widespread adoption of rooftop solar (RTS) systems by offering financial support and simplifying procedures for residential consumers. Under the Utility Led Aggregation (ULA) Model, State utilities and distribution companies (DISCOMs) act as aggregators to identify, coordinate, and facilitate installations through empaneled vendors. Given the multi-stakeholder nature of the model, MNRE’s latest directive introduces a uniform, digital-first payment mechanism that prioritizes verification, transparency, and efficiency in the release of funds.

Key Provisions of the New Payment Mechanism

The revised payment process mandates a single-tranche disbursement of CFA, strictly post-commissioning, ensuring that public funds are released only against verified and completed installations:

1. Post-Commissioning Release of CFA: No advance payment or partial disbursement is permitted.
2. Workflow through the National Portal: Each State, Utility, or Implementing Agency must issue work orders to selected vendors and upload installation details, consumer information, and verified vendor bank account details to the National Portal. After successful installation and verification, the agency will activate the “ULA Redeem” option to initiate CFA release, providing consumer-wise and vendor-wise traceability.
3. Verification and Payment by the NPIA: The National Program Implementation Agency (NPIA) designated as REC Limited will verify both the installation reports and vendor bank details uploaded to the portal. Post-verification, the CFA amount will be transferred directly to the vendor’s bank account, and an automated notification will be sent to the concerned State or implementing agency.
4. Vendor Detail Management: Any modification to vendor banking information will be routed through NPIA for re-verification and updating of records.
5. Applicability Across All ULA Models: The mechanism is uniformly applicable to all projects executed under the ULA framework covering both Utility Owned (EPC and sub-RESCO) and Consumer Owned categories ensuring consistency in implementation nationwide.

To facilitate smooth operations, MNRE will assign funds in advance to the NPIA under a designated budget head. This proactive allocation will help in real-time tracking of disbursements and eliminate procedural delays once installations are verified.

The Ministry has directed all State/UT implementing entities and utilities to strictly adhere to the prescribed payment process, emphasizing that no deviation will be permitted. This ensures consistent implementation and prevents delays in the release of CFA.

This structured payment release mechanism reflects MNRE’s continued commitment to enhancing financial transparency and process efficiency in rooftop solar deployment.
By linking disbursement strictly to verified commissioning, the new system minimizes the risk of fund misuse, strengthens vendor accountability, and instills confidence among consumers and financiers alike. Moreover, the use of the National Portal and NPIA-led verification introduces a centralized digital governance layer, aligning with the Government’s larger vision of Digital India and public finance reform.

This reform marks a pivotal milestone in India’s transition toward clean and accountable energy deployment. By codifying a transparent, technology-driven fund release system, MNRE ensures that every rupee of Central Financial Assistance directly supports verified rooftop solar installations. The mechanism not only strengthens administrative integrity but also reinforces the Government’s broader mission of empowering households through sustainable and affordable energy access, a cornerstone of India’s journey toward energy self-reliance and climate resilience.